Despite an oversupply of office spaces in Indonesia, there is a rising demand for low-carbon office buildings. The occupancy rate for green office spaces surged to 73.4% in the second half of last year, accompanied by a notable increase in rental prices. This trend is driven by multinational companies prioritising sustainability and working towards achieving their net-zero goals, even if it means paying higher rents for certified green buildings.
Over the past four years, the number of newly constructed low-carbon office buildings in Indonesia has grown by 7%, reflecting a shift towards more sustainable development in the sector. Several factors fuel this demand, including increased public awareness of sustainability, the pressure on global investors to meet environmental, social, and governance (ESG) standards, and introducing stricter regulations on energy efficiency and environmental management.
Although meeting the stringent materials and energy usage standards for low-carbon office buildings requires significant investment from developers, companies are still willing to pay a premium, particularly multinational corporations, which comprise most tenants in these spaces. Businesses adhering to ESG standards now find that using green buildings is no longer optional but necessary for fulfilling their sustainability commitments.
While the overall demand for office spaces in Indonesia has slowed since the COVID-19 pandemic, particularly in prime central business district (CBD) locations where rents fell by 1.1% last year, green office buildings have bucked this trend. With an oversupply of office spaces, some development projects have been put on hold, and many office buildings are being renovated to obtain green certifications. The most common certifications in Indonesia include LEED (Leadership in Energy and Environmental Design), Singapore’s Green Mark, and the local Greenship certification.
The Greater Jakarta area currently boasts 46 certified green office buildings, far outnumbering the 10 industrial facilities with green certifications and exceeding the number of green-certified residential and retail properties. This shift towards low-carbon offices is further supported by the International Finance Corporation (IFC) 's recent announcement in mid-February, unveiling Indonesia’s first sustainable loan aimed primarily at low-carbon retail buildings.
